Netflix CEO Hints at ‘Multiple’ Ad-Supported Tiers, Projects Doubling Subscribers Even Without Sports
Netflix CEO Hints at ‘Multiple’ Ad-Supported Tiers, Projects Doubling Subscribers Even Without Sports
After a challenging year of subscriber losses, Netflix appears to have stopped the bleeding for now. With 223 million subscribers and a new ad-supported tier designed to bring in more price-sensitive viewers, the service seems to be on the rebound. But increased competition has the company looking over its shoulder, and co-CEO Ted Sarandos says more changes are on the way.
A Second Ad-Supported Tier?
In an interview at today’s UBS Global TMT Conference, Sarandos said the company is just scratching the surface of what it means to have an ad-supported tier. “We have multiple tiers today,” Sarandos said, “so it’s likely there’ll be multiple ad tiers over time, but nothing to talk about yet.”
Until this year’s release of the ad-supported tier, the company was famously averse to advertising, but falling subscriptions and a stock price in freefall led to a reversal.
If Netflix does offer a second ad-supported tier, it would become a pioneer in that space. Right now, other services like HBO Max and Hulu offer just one ad-supported product. If Netflix added another ad-supported tier, it might have users choose between a less expensive plan with multiple ad breaks or a slightly more expensive plan where the ads only appear before the movie or show.
The Price of Sports
Sarandos essentially closed the door on streaming major sports. “We’ve not seen a profit path to ‘renting’ big sports today,” he said. “We are not anti-sports, we’re just pro-profit. We have yet to figure out how to do it. But I’m very confident we can get twice as big as we are without sports.”
Given the astronomical costs of streaming rights for major sports leagues, Sarandos said a preferable arrangement would be if Netflix could somehow own a sport’s exclusive streaming rights forever.
Live on Netflix
An upcoming Chris Rock standup show will be the first live event to air on Netflix, but it’s not likely to be the last. Sarandos said concerts or competition show finales are likely to air live as well. “Those kinds of things are actually a lot more fun to watch live. So we built the ability to do it,” Sarandos said.
People Over Prizes
Sarandos seemed to suggest Netflix’s days of aggressive Oscar-hunting may be over. After spending big on campaigns for films like “The Irishman,” “Mank,” and “The Power of the Dog,” we may see fewer of those “prestige” films on the Netflix slate.
“We’re trying to make content that fans love first and foremost. And if critics love it, too, that’s great. And if it wins awards too, that’s even better. But start with the fans,” Sarandos said.
“For some reason, when we talk about this business, we get clouded with a bunch of other things like Rotten Tomatoes scores and raw subscriber numbers without any ARPU attached to it. And it’s not really a good way to measure the business,” Sarandos said. “I would measure engagement, profit, and revenue.”
Sarandos promised that the content pipeline will flow more reliably in the coming years. With COVID blowing up the production slate, Netflix struggled to get a consistent output.
“This year, in these very tough conditions, we launched five of our most-watched shows in the history of Netflix in 2022 and three of our most-watched films in the history of Netflix in 2022. So we’re super excited about the future,” Sarandos said.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.